Aug 31

Federal Employees May Receive Whistleblower Rewards for Reporting Fraud Against the Government by Bringing Qui Tam Actions Under the False Claims Act

One hot whistleblower issue is whether a federal employee is eligible for a whistleblower reward for reporting fraud committed against the government agency he works at. The government takes the position that a federal employee may not receive a whistleblower reward under the False Claims Act, which is the main whistleblower reward program, based on the argument that employees have an inherent duty to report fraud against the government, especially if it is the agency the employee works at. However, some courts disagree and require the government to pay rewards to most federal employees who properly report fraud against the government by having their attorney file a qui tam claim. Those courts explain that the False Claims Act does not contain any exemptions or prohibitions upon government employees from receiving whistleblower rewards and Congress has not seen fit to change the statue to include such a prohibition.

The Fifth Circuit is one example. In Little v. Shell Exploration Prod. Co. that court ruled that federal employees are permitted to bring qui tam whistleblower reward suits under the False Claims Act. In Little, the two government whistleblowers worked as federal auditors and during the course of their audit work, discovered that Shell had defrauded the government out of approximately $19 million in unauthorized offshore drilling deductions. Prior to filing their qui tam claim, the two whistleblowers reported their findings of fraud to their superior, as required in their official capacity as governmental auditors.

The Fifth Circuit determined that nothing in the False Claims Act prevents a government employee from bringing a claim. The text of statute states that “[a] person may bring a civil action for a violation … for the person and for the United States Government.” Following Supreme Court precedent, the Fifth Circuit reasoned that the phrase “a person may bring a civil action,” suggests any person may do so. Viewing this subsection in the context of the whole statute, the Court reasoned that if Congress intended to restrict governmental employees from initiating qui tam suits, then Congress would have provided a limiting provision as it did with other subjects in the statute.

The Fifth Circuit also rejected the government’s argument because they were “employed specifically to disclose fraud” and therefore, their disclosures were not voluntarily provided to the government, which is a condition under the False Claims Act. The Fifth Circuit’s holding in Little suggests federal employees may initiate qui tam actions, provided the allegations in the complaint are not based on public disclosures and it is not the federal employee’s job to investigate and report the alleged fraud. The decision is reported at 690 F.3d 282.

If you are a federal employee and know of fraud against the government, you might be eligible for a whistleblower reward. However, there are some hurdles to overcome and pitfalls to avoid. You should contact an experienced attorney that understands the False Claims Act and the policies and procedures used by the government relating to the whistleblower reward program.

  1. ken luciani 2 Sep 2013 | reply

    Does Goverment encompass Postal infractions ?

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